Correlation Between Mr Cooper and CNFinance Holdings

Can any of the company-specific risk be diversified away by investing in both Mr Cooper and CNFinance Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mr Cooper and CNFinance Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mr Cooper Group and CNFinance Holdings, you can compare the effects of market volatilities on Mr Cooper and CNFinance Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mr Cooper with a short position of CNFinance Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and CNFinance Holdings.

Diversification Opportunities for Mr Cooper and CNFinance Holdings

-0.46

Correlation Coefficient

Mr Cooper  CNFinance Holdings

Very good diversification

The 3 months correlation between COOP and CNFinance is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group and CNFinance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNFinance Holdings and Mr Cooper is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mr Cooper Group are associated (or correlated) with CNFinance Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNFinance Holdings has no effect on the direction of Mr Cooper i.e., Mr Cooper and CNFinance Holdings go up and down completely randomly.

Pair Corralation between Mr Cooper and CNFinance Holdings

Given the investment horizon of 90 days Mr Cooper Group is expected to generate 0.63 times more return on investment than CNFinance Holdings. However, Mr Cooper Group is 1.58 times less risky than CNFinance Holdings. It trades about 0.09 of its potential returns per unit of risk. CNFinance Holdings is currently generating about -0.11 per unit of risk. If you would invest  10,303  in Mr Cooper Group on February 3, 2025 and sell it today you would earn a total of  1,755  from holding Mr Cooper Group or generate 17.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mr Cooper Group  vs.  CNFinance Holdings

Mr Cooper Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mr Cooper Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Mr Cooper reported solid returns over the last few months and may actually be approaching a breakup point.

CNFinance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNFinance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mr Cooper and CNFinance Holdings

The main advantage of trading using opposite Mr Cooper and CNFinance Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr Cooper position performs unexpectedly, CNFinance Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CNFinance Holdings will offset losses from the drop in CNFinance Holdings' long position.

The idea behind Mr Cooper Group and CNFinance Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.